Why Vietnam for Offshore Software Outsourcing

Vietnam is viewed as a viable alternative to China or India for foreign companies seeking to establish or increase their lower-cost manufacturing capacity.

Reason 1

Working-Age Population Surge

The workforce in Vietnam (defined as adults aged 23 to 65) is expected to jump by 23 million over the next 20 years, to 65 million. This should help make the country a viable alternative to China as a manufacturing center Vietnam is one of the largest and most densely populated countries in the region. According to Worldometers Vietnam has a population of over 95 million people and over 50% of the population is under 30 years of age.

Young staffs are full of energyeager to learn and eager to excel

Source: CIA World Factbook - This page was last updated on June 30, 2015

Reason 2

Growing pool of talent

Based on official information from government, Vietnam has over 30 000 new IT graduates that enter labor market every year. For software development outsourcing to be successful primary things is to be able to find a talented and experienced team to outsource to.

Excellent communication with your developer team is pivotal to success for every outsourced software development project. Young IT professionals realize that to be competitive on labor market they need to have good English speaking skills and the government made English part of school curriculum.

Our developers have always been hardworking and as Nikkei Asian Review described Vietnamese engineering talent as generally willing to take on tedious work, and to learn skills that others might see as outdated if that is what it takes to get the job done.

Communication skills, with a focus on English speaking skills, have been making good progress over the years

Reason 3

High-Cost effectiveness

One of the main reasons to outsource is to save on costs and Vietnam is one of the most competitive options in outsourcing or offshoring due to competitive labor costs and other business costs.

IT related employers have developed a reputation of paying good salaries that are even above the average of some middle-class salaries in Vietnam. Because of this employees tend to be more loyal and companies do not have high attrition rates. Low attrition rates mean a surge in productivity and savings in recruitment and new employee induction. However, salaries of developers and other IT experts are still considerably lower when compared to average salaries in EU or USA. We have even found information that in Vietnam labor costs can be up to 70~90% less than those in the USA (CIO magazine). This alone enables companies to save a lot of costs.

To empower economic growth further government signed a resolution to support enterprise until 2020 with the special focus on startups. On individual level income tax for workers in IT sector and other high-tech information technology will be lowered. To sum it up, Vietnam is doing many things to ensure that investors get their money’s worth.

While average annual expenses for the US, UK and AU software developers exceed $65,000 per year, we offer developers for about $20,000 per year. Plus you don’t have to worry about any social perks and benefits.

In Vietnam labor costs can be up to 70% less than in USA or 40% less than in Japan

Reason 4

Improving infrastructure

One of the major complaints about doing business in Vietnam was a lack of high-quality infrastructure that supports growth and having risks such as IP loss, power outages, and bad roads. In the last decade that is also changing and we have seen tech giants investing heavily in Vietnam. For example, in 2006 Intel announced an investment of 300 million USD and opened a semiconductor assembly and test facility. After one year the investment was increased up to 1 billion USD. In July 2014, Intel announced that it has manufactured the first “made in Vietnam” CPU and the rest is history. Microsoft, Samsung, Hitachi, Cisco, Alcatel-Lucent, and Toshiba are just some of the well-known tech companies that have opened manufacturing plants or R&D centers as well.

In 2010 Vietnam gained the status of a lower middle-income country. By 2020 Vietnam aims to achieve a status of middle-income and be regarded as a modern industrialized state. To reach all the set goals in early 2016 government announced that it will need the support of private sector for infrastructure funding. There is a 48 billion USD infrastructure budget for the period from 2016 to 2020 that will ensure sustainable economic growth and encourage foreign investment in infrastructure projects.

This is certainly good news for IT companies because of the positive impact on broadband connectivity and reliability of internet based services. You could say that Vietnam is fast moving in the digital world since 95% of the population aged between 15 and 24 is online. More than 49 million people in Vietnam are online and there are over 40 million Facebook users according to statistics by Internet World Stats and the number of users is growing and so is their hunger for better speeds and services.